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What Is a Public Utility?

Public utilities provide essentials to the public such as running water, electricity, sewage and natural gas. Although, they can be publicly owned, often they are privately owned companies such as AT&T, which provides telephone and cable services.

Public utilities usually monopolize the service they provide, but they are also regulated by federal, state and local governments. There are also community based non-profits that exclusively monitor the companies to ensure they are operating fairly and properly.

What Are the Public Utilities' Duties?

Public Utilities corporations’ main purpose is to provide a public service. Although, privately owned utility corporations have the same purpose, they are subject to fairly strict rules that apply to corporations or companies engaged in public service. Additionally, they are subject to any liability caused by their negligence. An example would be an electric company failing to regularly inspect, maintain and insulate wires, as well as failing to quickly fix any exposed wires. Note, however, that the public still has a duty to avoid open and obvious dangers.

Other duties that both private and publically owned Public Utilities owe to the people they serve include:

  • Duty to serve: Utilities are obliged to provide service on reasonable terms to anyone who lives within the service area.
  • Safe and adequate service: Utilities have the duty to provide safe and adequate service to all their customers.
  • Not to discriminate: Utilities are not allowed to discriminate between customers - every customer is entitled to service on equal terms.
  • Charge "just and reasonable" prices: Utilities must charge just and reasonable prices to their customers, often in accordance with the local filed rate doctrine.
  • Good faith and fair dealing: When providing service to their customers, utilities must act in good faith, and deal with their customers in a fair manner.

Who Regulates Public Utilities?

As mentioned above, because most utilities operate in near monopolistic conditions, they are heavily regulated by local, state, and federal authorities. Generally, the local and state agencies are called Public Service Commissions (PSC), Public Utility Commissions (PUC) or Federal Communications Commission (FCC). Also, community groups and even the local city council are allocated the responsibility of regulating the utility.

However, in many states an agency such as the FCC will not directly regulate a private utility which does not monopolize the market. Rather, they will issue a license once the utility is found credible. For example, the FCC will issue a license to a cable television company and any complaints will then be turned over to the utility itself to resolve.

What Are Regulated Utilities?

Regulated utilities are companies which are investor-owned and under the jurisdiction of a state utility commission because they are granted a monopoly subject to regulation. Examples of regulated providers are: electric utility services, Gas utility services, water utility services and telephone services.

What Are Unregulated Utilities?

Unregulated utilities include:

  • Municipal Utilities: Municipal utilities are run by the local board or city council, and usually provide electricity and water.
  • Rural Electric Cooperatives (REC): RECs provide services to over half the inhabitants in rural areas - they are usually a mix of public and regulated providers.
  • Unregulated Deliverable Fuels: These vendors provide alternative fuels such as propane, kerosene, wood, and oil.

Do I Need a Lawyer?

You should immediately contact a lawyer if you are having a problem with a public utility or government agency for any reason, including a utility that is failing to abide by any of the duties listed above. The agencies that regulate the utilities are not always forthcoming and will not thoroughly inform you of your rights. The regulations can be very complicated and a government law lawyer who focuses on government agencies and programs can explain the rules and regulations in your area. An attorney can work with a local utility commission to resolve your problem or seek other legal remedies.

Photo of page author Nicole Shoener

, LegalMatch Legal Writer

Last Modified: 01-09-2018 10:07 PM PST

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